The US economy lost 85,000 jobs in December, the Labor Department reported Friday, the same day new major layoffs were announced by UPS and Lockheed Martin.

The ongoing destruction of jobs in what the Obama administration has touted as an economic “recovery,” is indicative of a social disaster affecting ever wider layers of the population. Friday’s report comes on top of a whole battery of recent reports showing the widespread growth of hunger, homelessness, and poverty.

The complacent talk of economic recovery and the promotion by the Obama administration of the supposed success of its policies reveal both its callous indifference to the social crisis and a deliberate policy of maintaining a high level of unemployment to weaken the resistance of the working class to attacks on its wages, working conditions and standard of living.

The December jobs report closed out an abysmal year for US workers. Job losses in 2009 totaled more than 4.2 million, and the average official unemployment rate was 9.3 percent, up from 5.8 percent in 2008—an increase of more than 60 percent. More than 15.3 million American workers are now officially unemployed, 3.9 million more than when the year began. Since December 2007, upwards of 8 million jobs have been lost.

Over the decade, the US lost 1.6 million private sector jobs and added only 400,000 jobs overall—even as the population grew by almost 10 percent—the first time since the Great Depression that the economy actually shed jobs over a ten-year period, according to Floyd Norris of the New York Times. To have kept pace with population growth, the economy would have had to generate between 12,000,000 and 15,000,000 jobs since 2000.

The official jobless rate remained at 10 percent in December, but the broader “U-6” measure of unemployment, which takes into account those who have fallen out of the workforce or are employed part-time involuntarily, increased to 17.3 percent, or more than one in six US workers, close to the record high reached in October.

The percentage of the jobless without work for six months or longer, 39.8 percent, set a new high mark in records dating back to 1948. In all, 661,000 workers fell out of the US labor force in December, the largest decline in nearly 60 years, and the labor market participation rate fell to a 25-year low of 64.6 percent from 64.9 percent in November. Had these workers been counted, the official unemployment rate would have increased to 10.4 percent. For 2009 as a whole, the US workforce shrank by 1.5 million workers, the first annual decline since 1951.

The Labor Department revised its November jobs report upwards from a loss of 11,000 to a net gain of 4,000 jobs. But this was more than offset by a 16,000-job downward revision for October, raising job losses in that month to 111,000.

More major job cuts were announced on Friday. The defense contractor Lockheed Martin said it would cut another 1,200 jobs and United Parcel Service (UPS), the world’s largest parcel delivery firm, said it would cut 1,800 management positions.

UPS reported higher-than-predicted profits along with its latest job cuts announcement. Its stock rose rapidly in response, with Standard & Poor’s upgrading UPS shares from “hold” to “buy” and the Wall Street Journal calling them “hot.” UPS had already eliminated 15,000 jobs in 2009 and ceased contributions to its employees’ 401(k) retirement accounts.

Wall Street shrugged off the worse-than-expected jobs report, the Dow Jones Industrial Average closing the day slightly higher after falling in the morning.

The coupling of increased share prices with layoffs, jobs cuts and pay and benefit freezes has become commonplace in recent months. “While companies typically defend such moves as necessary to prepare for more challenging business conditions in the future, the layoffs they carry out often serve to grow profits for shareholders,” the Economic Policy Institute (EPI) pointed out Tuesday, listing a number of major corporations that have reaped hefty profits while paring down their workforces.

Yet the negative jobs report, in conjunction with bleak data from the housing market in recent days, has raised fears among economists that the US is heading for a “double dip” recession, in which an apparently recovering economy slips back into contraction.

The sectors of the economy experiencing the most job losses cast further doubt on the touted “recovery.” Job losses continued to mount in construction, which is closely tied to the housing and commercial real estate markets, and in manufacturing, which would appear to belie claims of a “bounce” in that sector. And the retail sector declined in December by 10,000 jobs, in spite of better-than-predicted consumer spending.

The government sector also lost jobs. This points once again to the inadequate character of the Obama administration’s stimulus package, the American Recovery and Reinvestment Act (ARRA), funds from which have been used to help plug holes in state budgets. Given the dire budgetary situation confronting state and local governments, it is likely that government jobs will be shed at a far higher rate in the coming months—more still after the impact of the stimulus begins to wane in the summer.

Temporary jobs grew for the fifth consecutive month, the economy adding 47,000 short-term positions in all. Some commentators view this as an indication that employers may be preparing to hire full-time workers, a scenario dependent upon continued improvement in business conditions.

The average work week remained at the near historic low of 33 hours. The work week must expand markedly before any sustained improvement in labor market conditions, analysts say. “Firms have plenty of scope to expand hours before adding new workers,” commented Sal Guatieri, an economist with BMO Financial Group.

Among demographic groups, blacks saw a sharp increase in unemployment to 16.2 percent from 15.6 percent in November and 12.1 percent one year ago. The teenage unemployment rate rose to 27.1 percent in December from 26.8 in November and 20.8 in 2008. Among black teenagers the unemployment rate was at 48.4 percent. When taken together with their labor market participation rate of just 27.5 percent, this means that only 14.2 percent of black teens have jobs.

The US December jobs report was mirrored by worse-than-expected data from Europe, also released Friday. The Eurozone saw the official unemployment rate rise to over 10 percent for the first time since the introduction of the common currency in 2002, according to Eurostat.

In France, unemployment increased to 10 percent, in Italy it held steady at 8.3 percent, in Germany it was 7.6 percent. In Spain, the fourth largest Eurozone economy, the unemployment rate was 19.4 percent, behind Latvia (22.3 percent) for the worst mark in Europe. Among Spanish workers under the age of 25, the unemployment rate stood at a staggering 43.8 percent.

The Obama administration met the latest US jobs report with scarcely concealed indifference. President Obama counseled that the “the road to recovery is never straight” but that the economy “is still pointing in the right direction,” as he announced a measure that would hand over $2.3 billion in tax credits to manufacturers to put in place “green technologies.” These would fund 180 projects and would create a grand total of 17,000 jobs, according to the administration.

Christina Romer, Obama’s chair of the Council of Economic Advisers, called the December job losses a “slight setback” when “compared with the unexpectedly good report for November.” Romer added that the report “underscores the need for responsible actions to jump-start private-sector job creation.” Romer’s references to “responsible actions” and “private-sector job creation” serve notice that the administration is not contemplating any new government stimulus or public works program.

All indications are that for America’s workers, 2010 will be even worse than 2009.

The Labor Department report confirmed the consensus view that the official unemployment rate in 2010 will remain close to, or above, 10 percent. Even should job growth occur, it would have the effect of driving up the official unemployment rate by drawing back into the hunt for jobs, and thus into the official workforce, “discouraged workers” who had given up looking.

To reverse the unemployment rate, economic growth would have to be more rapid than the 4 percent gross domestic product increase predicted by many economists for the fourth quarter of 2009, and the economy would have to add well over the 100,000 to 150,000 new jobs monthly necessary to keep pace with population growth.

It is an article of faith among economists that any sustained recovery will require a steady increase in consumer spending. Yet stagnating wages—the average hourly wage increased but three cents in December—are offset by increases in the cost of living.

The American Automobile Association (AAA) reported the average price for a gallon of gasoline in the US hit $2.70 on Thursday, the highest price in 15 months. Stressed consumers sharply cut back their debt in November, according to a Friday report from the Federal Reserve. Seasonally adjusted consumer debt declined by 8.5 percent, $17.49 billion in all, with most of the drop-off coming in credit card debt. Economists polled by MarketWatch had expected a decline of $3.9 billion.

The December jobs report comes on the heels of recent data showing a sudden contraction in pending home sales, an increase in foreclosures, and a sharp increase in personal bankruptcies.

Source: Global Research

Other stories at We Are Change Colorado Springs

Six Million in the US With no Income but Food Stamps

3.6% of Prime Mortgages Delinquent 60 Days or Longer

Unemployment for young vets surpasses 20%

Some six million Americans—one in 50 people in the US—are living on no income other than $100 or $200 a month in food stamps, according to an analysis of state data by the New York Times. The number of people who reported that they are unemployed and receive no cash aid—neither welfare, nor unemployment insurance, pension benefits, child support or disability pay—the newspaper reported, has jumped by 50 percent over the last two years, as the recession has taken hold.

According to the January 3 article, the number of people reporting no income tripled in Nevada over the past two years, doubled in Florida and New York, and increased nearly 90 percent in Minnesota and Utah. In Wayne County, Michigan—which includes Detroit, where half the population is unemployed or underemployed—one out of every 25 residents reports an income of only food stamps. In Yakima County, Washington, the figure is one out of every 17.

The figures reveal the vast scale of human suffering in the US as the new decade begins and puts the lie to talk of an economic “recovery.” The 6 million people in households reporting no income—which includes 1.2 million children—is equivalent to the entire population of Indiana or Massachusetts, or the combined populations of Los Angeles, Philadelphia and Boston.

Such a social catastrophe underscores the indifference of the Obama administration, which has done virtually nothing to provide relief to those who have lost their jobs, homes and livelihoods—even as it spares no expense to shore up the fortunes of the financial elite and fund its ongoing wars.

The number of people without an income has been on the rise since 1996, when Democratic President Bill Clinton and the Republican Congress ended welfare as a universal entitlement, a status the federal relief program had enjoyed since its inception in the 1930s. Pledging to “end the cycle of dependency,” the Democrats and Republicans imposed lifetime limits on benefits, drastically reduced the level of cash assistance, and imposed restrictive “workfare” and other requirements on further aid.

Despite the increased need for relief, Obama has opposed any additional funding for what remains of the welfare program, called Temporary Assistance for Needy Families. Since their peak in the 1990s, welfare rolls are down nearly 75 percent, the Times reported.

“Many of those who would have received cash assistance in past recessions are not getting it now,” Judy Putnam, a spokesperson for the Michigan League for Human Services, told the World Socialist Web Site. “Only a third of the state’s children living in poverty are getting cash assistance compared with two-thirds before ‘welfare reform’ in 1996. People in Michigan are heavily dependent on food stamps.”

With jobless benefits covering only half of the unemployed, food stamps—which provide an average of $1 per meal per person, or around $100 per person each month for individuals or families earning up to 130 percent of the official poverty level—have become the safety net of last resort. A record 36 million people—one in eight people and one in four children—now rely on the food stamp program. The joint federal-state Supplemental Nutrition Assistance Program (SNAP) is expanding by 20,000 people per day, but is still estimated to serve only two-thirds of those who qualify.

An earlier Times study showed there are more than 200 US counties where food stamp usage shot up by at least two-thirds, including Riverside County, California, most of greater Phoenix and Las Vegas, a ring of Atlanta suburbs, and a 150-mile stretch of southwest Florida from Bradenton to the Everglades. The study found there are over 800 counties where food stamps feed one third of all children.

Late last year, researchers at Washington University in St. Louis released a study showing that 50 percent of all children and 90 percent of African American children will receive food stamps at some point before their 20^th birthday. “Rather than being a time of security and safety,” said Mark Rank, Ph.D., one of the authors of the report, “the childhood years for many American children are a time of economic turmoil, risk, and hardship.”

The January 3 Times report focused on Florida, where the number of people with no income beyond food stamps has doubled in two years and more than tripled along the southwest coast, where a housing boom turned into a bust of foreclosed and abandoned homes. According to state data, those without income were split evenly between families with children and individuals. Those affected were also racially mixed—about 42 percent white, 32 percent black, and 22 percent Latino—with whites making up the fastest growing segment during the recession.

This plunge into destitution has affected wide layers of the population. The Times article cites a middle-aged mother of two, Isabel Bermudez, who moved from a Bronx housing project to sell real estate in Florida. Once enjoying a six-figure income, a house with a pool and investment property, she lost her job and home and ran out of unemployment benefits. Ms. Bermudez’s sole income is now $320 a month in food stamps. “I went from making $180,000 to relying on food stamps,” she told the newspaper, adding that without the program she wouldn’t be able to feed her children.

The increasing reliance on meager food stamp allowances exposes the absence of anything that can properly be called a social safety net in the US. The situation will only get worse, as both the Democrats and Republicans prepare to slash what remains of publicly funded programs in order to pay for the multitrillion-dollar Wall Street bailout and expansion of US military action around the world.

The theme of Obama’s State of the Union address—expected early next month—will be long-term deficit reduction and a further demand that the American people reduce their consumption. The White House is backing a bipartisan commission to recommend major cuts in basic social programs along with regressive taxes on consumption, and Obama’s budget director, Peter Orszag, has said the administration will take measures to reduce the deficit in its next budget due out in February. Such actions will throw millions more into poverty.

The social crisis facing working people—depression levels of unemployment, home foreclosures, the growth of hunger, poverty and homelessness—is the most graphic expression of the failure of capitalism, an economic system that benefits the wealthy few at the expense of the vast majority.

In the midst of this worsening situation for the working population, it was reported last week that the top three banks—Goldman Sachs, JPMorgan Chase and Morgan Stanley—which received tens of billions in public funds under the Troubled Asset Relief Program—will hand out $49.5 billion in end-of-year cash bonuses and stock awards. All told, US banks will dispense an estimated $200 billion in total compensation.

The Obama administration is continuing and accelerating the transfer of wealth from working people to those who are responsible for precipitating the worst economic breakdown since the Great Depression.

Nearly a year after his inauguration, President Obama has demonstrated he is nothing but a tool of the financial oligarchy. The very future of the working class depends on the development of a mass socialist movement against this administration, both big business parties, and the profit system which they defend.

Source: Global Research

Other stories at We Are Change Colorado Springs

U.S. Food Stamp Program Expanding By 20,000 People Per Day

US Moving To Third World Model

3.6% of Prime Mortgages Delinquent 60 Days or Longer

The U.S. government is broke. Nevertheless, Washington is currently fighting two wars: one is ebbing while the other is expanding. How to pay for the Afghan build up? Democrats say raise taxes. Republicans say no worries. The best policy would be to scale back America’s international commitments.

The United States will spend more than $700 billion on the military in 2010. The administration’s initial defense-budget proposal, minus the Afghanistan and Iraq wars, was $534 billion, almost as much as total military spending by the rest of the world. Even though the Iraq war is winding down, its costs will persist for years as the government cares for thousands of seriously injured veterans.

Afghanistan cost about $51 billion in 2009 and had been expected to run $65 billion in 2010. However, the president’s build up is estimated to add another $30 billion annually. And if this “surge” doesn’t work—U.S. troop levels still lag well behind the minimum number indicated by Pentagon anti-insurgency doctrine—the administration will feel pressure to further increase force levels. Every extra thousand personnel deployed to Afghanistan costs about $1 billion.

Although the president reportedly plans to emphasize deficit reduction in his upcoming budget, he continues to propose new programs even with $10 trillion in red ink predicted over the next decade. The cost of the Afghan war will be yet another debit added to the national debt.

Some Democrats are demanding measures to pay for the war. For instance, Appropriations Committee Chairman Representative David Obey is advocating a special war tax to “share the burden.” He, along with Rep. John P. Murtha and Rep. John B. Larson, have introduced the Share the Sacrifice Act of 2010. They complain that “the only people who’ve paid any price for our military involvement in Iraq and Afghanistan are our military families.”

While Rep. Obey would impose a temporary surcharge on people earning as little $30,000 annually, Senate Armed Services Committee Chairman Carl Levin proposes adding a new, higher tax bracket to pay for the wars. However, the latter admits that a recession may not be a good time to hike taxes—a sentiment widely shared on Capitol Hill.

Senator Bernie Sanders, an avowed socialist, argues: “If you’re going to have a presence there [in Afghanistan], you just can’t pass the bill on, as we did in Iraq, to our kids and our grandchildren. I think that’s wrong. I think that’s immoral.” However, he has proposed no specific fiscal response.

Sen. Ben Nelson, the key swing vote for the $2 trillion Senate health-care bill, proposes issuing war bonds—that is, more debt. Doing so, he contends, would “reduce our dependence on foreign creditors and support for our service members and America’s mission.” Of course, in fiscal terms there is no difference between civilian bonds and war bonds. And the proposal mimics the “Patriot Savings Bonds” promoted by the Bush administration in 2001.

Some Democrats want the administration to lead. Rep. Mike Honda opines: “If the president intends to go in over our objections, he should have to bear the burden of asking for a tax to pay for it.” The administration refuses to endorse either surtaxes or bonds, but plans on including the cost of the Afghan war, including the surge, in the 2010 budget. The Bush administration preferred to hide the cost of its conflicts by placing war spending in supplemental bills. Secretary of State Hillary Clinton explained: “The president is committed to making it fully accounted for.”

“Pay-as-you-go” proponents have a point. Although the Republican Party historically supported balanced budgets, President George W. Bush and the Republican congressional majority turned a surplus into a deficit while upping domestic outlays across the board, creating a big new health care program (the Medicare drug benefit), and initiating two wars. For the GOP to now rail against wasteful spending is a bit of shameless political theater all too typical for Washington.

However, the Democrats’ new-found concern for fiscal responsibility also looks suspect. Rep. Obey, who in 2007 proposed a similar levy for Iraq, complains that the money spent in Afghanistan “will cost us on education, on our efforts to build the entire economy.” Rep. Lynn Woolsey similarly objects that the war has “diverted funds from desperately needed domestic priorities.” Sen. Levin admits that he wants higher taxes in principle—the wealthy “have done incredibly well”—arguing that taxes should have been raised during the previous administration.

In rebuttal, Senate Minority Leader Mitch McConnell lost no time in pointing out the obvious: “The Democrats are willing to bust the budget to pass a domestic program that the American people are against, but all of a sudden find it offensive to do something that is absolutely essential to the security of Americans here in the United States.” There’s little evidence that attempting to build an effective, pro-Western central government in Kabul, essentially where the mission is heading, has much to do with U.S. security, but Sen. McConnell’s broader point remains valid: Democrats were far less concerned about excessive borrowing when they were voting for hundreds of billions of dollars for social programs, bailouts and “stimulus” packages. For this reason Republican legislators have proposed to pay for the Afghan surge by freezing discretionary outlays, using unspent “stimulus” funds, and delaying debates over health-care reform and cap and trade. There likely is another objective lurking beneath the surface of the proposed tax hike. Just as Rep. Charles Rangel advocated reinstating conscription in an attempt raise the perceived public cost of the Iraq war, surcharge advocates may hope to highlight the cost of the Afghan war.

Frederick Kagan of the American Enterprise Institute complains that “Certain members of the progressive caucus see this as very attractive because it has the chance of increasing the unpopularity of the war.” Roberton Williams of the Urban Institute-Brookings Institute Tax Policy Center makes the same point: “Look at who’s pushing this. It’s people opposed to the war.”

While Republican politicians continue the raise the alarm over new domestic spending initiatives, they fall curiously silent when it comes to America’s oversize military budget and war costs.

Indeed, the conservative Heritage Foundation, long a proponent of reduced spending, put out a special handout entitled “THE WAR IN AFGHANISTAN: Costs in Context.” According to Heritage, $95 billion in 2010 is “a small price to pay,” “a tiny fraction of federal spending,” “small relative to America’s past wars,” “far less than TARP, bailouts, and the stimulus,” and “smaller than the annual growth in entitlements.”

These are all true as far as they go, but spending on almost every federal program is small compared to the overall deficit. When Rep. Woolsey complained that war outlays had “exploded the lid off our national debt,” she could have made the same comment about a myriad of domestic programs as well.

Moreover, Heritage’s statements are not ones conservatives typically make regarding proposals for new domestic spending initiatives. And the military spending adds up: since 2001 Washington has spent nearly $1 trillion on Afghanistan and Iraq. The Congressional Budget Office figures the cost over the next decade could run $1.6 trillion. The interest on war-related debt adds another $100 billion. And the Obama administration is hiking non-war related military outlays, merely slowing the rate of increase.

Washington is spending far too much. There is no easy way to pay for an expanded war in Afghanistan. Higher taxes at least impose the real cost on the present generation. More debt continues the dishonest fiction that the American people can get something for nothing.

But the solution is to cut expenditures. The fact that Washington is spending too much money on domestic programs is no excuse for unnecessary military expenditures. Defense outlays need to be evaluated critically on their own terms.

This is where congressional Democrats should mount their attack. Neither higher taxes nor new war bonds is the issue. The problem is the extension of the U.S. occupation of Iraq and expansion of conflict in Afghanistan. Even more dubious are military deployments protecting prosperous and populous allies throughout Asia and Europe. Americans no longer can afford to subsidize rich friends and remake poor dependents all around the globe.

The United States is attempting to run a quasi-empire on the cheap. How we do the paying is less important than what we are paying for. Much of today’s “defense” spending has nothing to do with defending America. Washington should bring our foreign ends into conformity with our domestic means.

Source: Small Government Times

Other stories at We Are Change Colorado Springs

Glenn Beck and O’Reilly calling for higher taxes?

Video: The Hashish Army- Afghanistan. Is this what we are fighting for?????

New tax should pay for Afghan war?

Did America slip into a semiliterate, polarized, pre-fascist state over the past decade or so, allowing greedy oligarchs and corporate elites to run the government? Two books I recently read offer reasonably persuasive evidence and arguments that the country did, and a third suggests that dictatorial mindsets could besiege Americans, with an assist from the Internet, if they don’t come to their more deliberative senses. Each of the books offers an informed diagnosis of the dangers that widespread ignorance and ideological polarization pose for American democracy, though none offers a comprehensive treatment for the malaise.

I read the three books in less than two weeks; friends ask how that was possible. The trick is to avoid not only Facebook and Twitter but also: celebrity news, cable news, Oprah, Jerry Springer, American Idol, The Swan, other reality-TV shows, professional wrestling, violent pornography, positive psychology and right-wing Christian fundamentalism.

The latter list includes some of the spectacularly mind-numbing American pursuits that Chris Hedges examines in Empire of Illusion: The End of Literacy and the Triumph of Spectacle. Hedges submits that while they mesmerized large portions of the American citizenry, CEOs being paid millions of dollars a year to run companies that feed on taxpayer money usurped our government — with the help of elected officials bought by campaign contributions and tens of thousands of corporate lobbyists who now write many of the nation’s laws.

“Those captivated by the cult of celebrity do not examine voting records or compare verbal claims with written and published facts and reports,” Hedges writes. “The reality of their world is whatever the latest cable news show, political leader, advertiser, or loan officer says is reality. The illiterate, semiliterate, and those who live as though they are illiterate are effectively cut off from the past. They live in an eternal present. They do not understand the predatory loan deals that drive them into foreclosure and bankruptcy. They cannot decipher the fine print on credit card agreements that plunge them into unmanageable debt. They repeat thought-terminating clichés and slogans. They seek refuge in familiar brands and labels. … Life is a state of permanent amnesia, a world in search of new forms of escapism and quick, sensual gratification.”

Of course, they did not get into this clueless state by themselves. They were manipulated by “agents, publicists, marketing departments, promoters, script writers, television and movie producers, advertisers, video technicians, photographers, bodyguards, wardrobe consultants, fitness trainers, pollsters, public announcers, and television news personalities who create the vast stage for illusion,” Hedges continues. “They are the puppet masters. … The techniques of theater have leeched into politics, religion, education, literature, news, commerce, warfare, and crime.”

I know those fools are out there — many millions of them. I might even be one. But what is absolutely maddening about this book is Hedges’ penchant for stating sweeping, generalized claims as absolutes. And yet this master of divinity turned New York Times war correspondent become sociological scholar often bolsters his summations with just enough research, statistical data and anecdotal evidence to make them plausible. The book takes readers to Madison Square Garden for an exegesis of professional wrestling; to the Adult Video News Expo in Las Vegas for lengthy interviews with porn actors and producers and an inflatable doll vendor; and to Claremont Graduate University in California for a seminar on positive psychology, which Hedges terms a “quack science” that “is to the corporate state what eugenics was for the Nazis.”

As a resident of Miami Beach, where the pornographic sensibility is a way of life, I wasn’t shocked to read that annual porn sales in the United States “are estimated at $10 billion or higher” or that DIRECTV distributes “more than 40 million streams of porn into American homes every month.” But I shuddered when Hedges documented not just a growing appetite for violent forms of porn in America but their remarkable visual similarity to photos of prisoner abuse at Abu Ghraib. “Porn reflects the endemic cruelty of our society,” he writes. “The violence, cruelty, and degradation of porn are expressions of a society that has lost the capacity for empathy. … The Abu Ghraib images that were released, and the hundreds more disturbing images that remain classified, could be stills from porn films.”

Unfortunately, Empire of Illusion won’t enlighten or offend the large swaths of functionally illiterate Americans transfixed by smut, pro wrestling, reality TV or celebrity gossip, because those people won’t read the book. But this scholarly 193-page diatribe, which draws from a 100-author bibliography ranging from the late neo-Marxist Frankfurt School icon Theodor Adorno(The Culture Industry) to Princeton professor emeritus Sheldon Wolin (Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism), would surely madden many proud affiliates and alumni of America’s elite university system.

Hedges, who attended New England prep schools, Colgate and Harvard as a young man, and later taught at Princeton, Columbia and New York University, asserts in Chapter 3, “The Illusion of Wisdom,” that Harvard, Yale, Princeton and most elite schools “do only a mediocre job of teaching students to question and think.” Elite universities are in the business of producing “hordes of competent systems managers” not critical thinkers. Those statements strike me as generally accurate. But I’d expect some fierce academic blowback from this notion: “The elite universities disdain honest intellectual inquiry, which is by its nature distrustful of authority, fiercely independent, and often subversive.” And Hedges suggests that these high-end schools “refuse to question a self-justifying system” in which “organization, technology, self-advancement, and information systems are the only things that matter.”

Hedges not only blames the elite universities for our mortgage-fueled financial crisis but is sure their alumni on Wall Street and in Washington have no capacity to really fix the economic system. “Indeed, they’ll make it worse,” he predicts, exchanging his reportorial register for the absolutist. “They have no concept, thanks to the educations they have received, of how to replace a failed system with a new one.” (He includes George W. Bush, Barack Obama and Obama’s “degree-laden” cabinet members in this group.)

If Hedges knows how to fix the system, he doesn’t tell us inEmpire of Illusion. I hope that’ll be the subject of his next book, because in the meantime, “powerful corporate entities, fearful of losing their influence and wealth” are waiting for “a national crisis that will allow them, in the name of national security and moral renewal, to take complete control,” he warns, without citing verifiable evidence for his dire prediction.

What if PBS, Fox and YouTube organized a national debate featuring Chris Hedges, Treasury Secretary Tim Geithner, his predecessor Hank Paulson, Goldman Sachs CEO Lloyd Blankfein, Christian Coalition president Roberta Combs and Senate Majority Leader Harry Reid? That panel is a little far-fetched, but it’s the sort of cross-ideological forum that Cass Sunsteinprescribes in Republic.com 2.0 as a way of preventing the nation from sliding into factional, perhaps even violent strife.

Sunstein is a law professor, author and perennial all-star in the world of public intellectuals; he took leave from Harvard Law School to be administrator of the Office of Information and Regulatory Affairs at President Obama’s Office of Management and Budget. “The American constitutional order was designed to create a republic, as opposed to a monarch or direct democracy,” he writes. “Representatives would be accountable to the public at large. But there was also supposed to be a large degree of reflection and debate, both within the citizenry and within government itself.”

Of course, the Founding Fathers knew public debate could get ugly. Sunstein notes Alexander Hamilton’s belief that the “jarring of parties” was a good thing because it would engender deliberation and, over time, a “republic of reasons.”

Are we one today? Not as much as we could be, Sunstein thinks. His fundamental concern in Republic.com 2.0 is the Internet’s potential for impeding deliberation between groups with opposing viewpoints, eventually increasing ideological rigidity and polarization to a point of no return. It’s vastly easier to join like-minded Internet “enclaves” across the world than to drive across town for a meeting in which someone might challenge one’s pre-established beliefs and positions. Sunstein walks readers through behavioral studies finding that when groups of like-minded individuals are isolated from different viewpoints, they tend toward consensus on the most extreme position held within the group.

At worst, Sunstein says, Internet-induced polarization could lead to social instability. “The danger is that through the mechanisms of persuasive arguments, social comparisons, and corroboration, members will move to positions that lack merit,” he writes. “It is impossible to say, in the abstract, that those who sort themselves into enclaves will generally move in a direction that is desirable for society at large or even for its own members. It is easy to think of examples to the contrary, as, for example, Nazism, hate groups, terrorists, and cults of various sorts.”

Clearly, the Internet has potential to create political good. Citizens have access to vast amounts of information and commentary. Even like-minded enclave proliferation can be good: The more there are, the greater the potential for inter-enclave discussion.

But a study of 1,400 liberal and conservative blogs found the vast majority of bloggers link only to like-minded blogs. Worse, another study showed that when “liberal” bloggers comment on “conservative” blog posts, and vice-versa, a plurality of comments simply cast contempt on opposing views. “Only a quarter of cross-ideological posts involve genuine substantive discussion. In this way, real deliberation is often occurring within established points of view, but only infrequently across them,” Sunstein reports.

One cure for Internet-driven polarization lies with “general interest intermediaries.” By that terminology, Sunstein means media outlets like The New York Times, Washington Post, Wall Street Journal, current affairs magazines, PBS, NPR and old-fashioned network news broadcasts: “People who rely on such intermediaries have a range of chance encounters, involving shared experiences with diverse others, and also exposure to materials and topics that they did not seek out in advance.”

Of course, these are the media that are in decline because of the Internet. Sunstein imagines a greater role for private and public institutions, including the federal government, in ensuring enough general-interest intermediaries exist to make the republic’s communications system “a help rather than a hindrance to democratic self-government” and a counterbalance to the echo chambers of the Web.

For the most part, Thom Hartmann’s Threshold: Crisis of Western Civilization functions as a general-interest intermediary in book form. Still, readers can be forgiven for wondering, at times, whether they are in a no-conservatives zone. Hartmann is host of the Thom Hartmann Show, a nationally syndicated “progressive” radio talk show.

Just the same, Threshold is so geographically and temporally sprawling that it offers material even progressive readers might not have chosen in advance: a refugee camp in contemporary Darfur in southern Sudan (Lesson: Famine leads to war and more suffering.); ancient New Zealand, where the Maoris exterminated the moa birds, forcing them to become cannibals (Don’t repeat this mistake.); contemporary Denmark, where people happily send 30 to 60 percent of their income to the government in exchange for free health care, free university tuition, yearlong maternity leave, ample unemployment coverage and more (Americans should consider this.); Caral in ancient Peru, where anthropologists have found no evidence of weaponry (”Maybe peace is the natural state of things.”); the Iroquois people, who made certain decisions based on how they would affect tribe members seven generations hence. (If only the rest of us Americans would do that.)

In sum, Threshold is 262 pages of scientific and historical anecdote suggesting that unregulated markets, undemocratic behavior and unecological practices lead to catastrophe. If you haven’t already read a good overview of topsoil depletion, the marine fisheries crisis, rain forest destruction, the democratic behavior of red deer, the 1888 Supreme Court decision that defined corporations as “persons,” the $15 million that 30,000 corporate lobbyists spend weekly when Congress is in session, President Eisenhower’s premonition of a military-industrial complex with “unwarranted influence,” the 2004 computerized voting machines controversy, the $1 trillion in tax dollars the U.S. government spent on war in Iraq and Afghanistan, and not on infrastructure and schools, and the subprime loan/toxic securities debacle — you can find one in Threshold. Hartmann’s common-sense remedies include “recovering a culture of democracy,” “balancing the power of men and women,” “reuniting with nature,” “creating an economy modeled on biology” and “influencing people by helping them rather than bombing them.” His book offers few specifics on how these ends might be accomplished in the real world.

So are we drifting along in a pre-fascist state? Has our democratic system really fallen under the control of corporate America? Hartmann’s take obviously starts and stays (far) to the left of center, and we’ll just have to stay tuned and see whether future events support the dire view he and Hedges have of America’s political direction. Meanwhile, I’ll be on the lookout for a persuasive book telling me how it isn’t exactly so, and why America can escape from the economic and ecological spectacle it has made itself.

Source: AlterNet

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In spite of all the efforts to date Serious U.S. mortgage delinquencies up 20 percent.

Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, as the percentage of current and performing mortgages fell for the sixth consecutive quarter, banking regulators said on Monday.

The report by the Office of Comptroller of the Currency and the Office of Thrift Supervision, which are part of the Treasury Department, covered about two-thirds of all U.S. mortgages.

It found 3.6 percent of prime mortgages — those made to the most credit-worthy borrowers — were seriously delinquent in the third quarter. That was more than double the year-ago quarter and up nearly 20 percent from the 2009 second quarter.

Big U.S. banks and thrifts carried out 2.4 million home loan modifications, trial period plans or payment plans in the quarter, spurred mostly by a government plan offered by President Barack Obama, according to the report. But only 1 percent of those had been converted to permanent modifications as of September 30, 2009, the report said.

A major cause of this disconnect is that loan servicers are finding that many borrowers who initially appear to qualify for the program do not, according to the report.

OCC and OTS Mortgage Metrics Report Third Quarter 2009

Please consider the Press Release for the OCC and OTS Release Mortgage Metrics Report.

National bank and thrift servicers implemented more than 680,000 home loan modifications and payment plans in the third quarter of 2009 to avoid preventable foreclosures, according to a report released today by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

The OCC and OTS Mortgage Metrics Report for the Third Quarter 2009 showed that the number represented a nearly 69 percent increase in home retention actions from the previous quarter.

Despite progress in this area, the percentage of current and performing mortgages dropped for the sixth consecutive quarter to 87 percent of the servicing portfolio, serious delinquencies rose to 6.2 percent, and foreclosures in process surpassed 1 million mortgages, or about 3.2 percent of the servicing portfolio. Of particular note was the deterioration among prime mortgages, the largest category of mortgages. Serious delinquencies at the end of the third quarter increased to 3.6 percent of prime mortgages, up almost 20 percent from the previous quarter and more than double a year ago.

Having read the press release, inquiring minds are digging into the OCC and OTS Mortgage Metrics Report

The percentage of modified loans 60 or more days delinquent or in process of foreclosure increased steadily in the months subsequent to modification (see Table 2). Modifications made after the third quarter of 2008 appeared to perform relatively better than older vintages.

The most recent modifications made in the second quarter of 2009 had the lowest percentage of mortgages (18.7 percent) that were 60 or more days delinquent three months subsequent to modification. This lower three-month re-default rate may be an early indicator of sustainability for loan modifications that reduce monthly payments.

Redefaults On Modified Loans

click on chart for sharper image

Modifications on loans held in the servicers’ own portfolios continued to perform better than loans serviced for others. This difference may be attributable to differences in modification programs and the servicers’ flexibility to modify loan terms to achieve greater affordability and sustainability.

Modified government-guaranteed loans showed the highest delinquency rates at 6, 9, and 12 months following modification relative to other investor loan types (see Table 3).

click on chart for sharper image

Completed foreclosures increased 11.9 percent from the prior quarter, reflecting the increasing inventory of foreclosures in process. New short sales increased by 22.4 percent to 30,766 as a result of an increased emphasis on this loss mitigation approach by homeowners seeking an alternative to foreclosure but either can not or do not wish to stay in their homes (see Table 6).

click on chart for sharper image

There are more tables and data in the report worth taking a peek at. Nearly 3 more months have gone by, but as of the end of the third quarter things do not look that promising.

Source: Mish’s Global Economics

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Brace for a Wave of Foreclosures, the Dam is About to Break

Dec. 19 (Bloomberg) — Seven U.S. banks were seized by regulators, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.

Banks with $14.4 billion in total assets were closed yesterday in six U.S. states, the FDIC said in statements on its Web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.

Two of the closures were in California. The assets and deposits of Federal Bank of California in Santa Monica were bought by closely held OneWest Bank, which acquired IndyMac Federal Bank this year. Imperial Capital Bank was bought by City National Corp., the Beverly Hills-based parent of City National Bank, which expanded in Southern California with the purchase.

“Imperial Capital Bank is a very good fit for City National, given that eight of its nine locations are in communities we serve,” City National Chief Executive Officer Russell Goldsmith said in a statement. “We’re pleased to contribute to the increased stability of the banking system.”

Federal Bank was the biggest lender seized yesterday, with $6.1 billion of assets and $4.5 billion in deposits, according to the FDIC. Based in La Jolla, Imperial Capital had assets of $4 billion and $2.8 billion in deposits.

Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year.

‘Larger Number’ of Failures

The budget “will ensure that we are prepared to handle an ever-larger number of bank failures next year, if that becomes necessary,” FDIC Chairman Sheila Bair said in a statement. Yesterday’s bank closings will cost the agency about $1.8 billion, according to the FDIC statements.

U.S. lenders are buckling under the weight of loans tied to commercial real estate, which is plummeting in value. Prices have dropped 43 percent from their peak in October 2007, Moody’s Investors Service said last month.

The following table lists the banks seized yesterday. Asset figures are in millions of U.S. dollars. Click on the bank name to see the FDIC’s statement on the closing.

FAILED BANK                   BUYER                    ASSETS

First Federal Bank            OneWest Bank             6,100
Santa Monica, California      Pasadena, California

Imperial Capital Bank         City National            4,000
La Jolla, California          Los Angeles

Peoples First                 Hancock Bank             1,800
Panama City, Florida          Gulfport, Mississippi

New South Federal             Beal Bank                1,500
Irondale, Alabama             Plano, Texas

Independent Bankers’          None                     585.5
Springfield, Illinois

RockBridge Commercial         None                     294
Atlanta

Citizens State                None                     168.6
New Baltimore, Michigan

Source: Blomberg 

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Numerous high-level officials and experts warn that the economic crisis could lead to unrest world-wide – even in developed countries:

• Today, Moody’s warned that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world, that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics, and that a fiscal crisis remains a possibility for a leading economy, it said that 2010 would be a “tumultuous year for sovereign debt issuers”.

• The U.S. Army War College warned in 2008 November warned in amonograph [click on Policypointers’ pdf link to see the report] titled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development” of crash-induced unrest:
  

  The military must be prepared, the document warned, for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” “An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,” it went on. “Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance,” the document read.

• Director of National Intelligence Dennis C. Blair said:
  

  “The global economic crisis … already looms as the most serious one in decades, if not in centuries … Economic crises increase the risk of regime-threatening instability if they are prolonged for a one- or two-year period,” said Blair. “And instability can loosen the fragile hold that many developing countries have on law and order, which can spill out in dangerous ways into the international community.”***

  “Statistical modeling shows that economic crises increase the risk of regime-threatening instability if they persist over a one-to-two-year period.”***

  “The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism.”

  Blair made it clear that – while unrest was currently only happening in Europe – he was worried this could happen within the United States.

  [See also this].

• Former national security director Zbigniew Brzezinski warned “there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots.”

• The chairman of the Joint Chiefs of Staff warned the the financial crisis is the highest national security concern for the U.S., and warned that the fallout from the crisis could lead to of “greater instability”.

Others warning of crash-induced unrest include:

• The head of the World Trade Organization

• The head of the International Monetary Fund (and see this)

• The head of the World Bank

• Senator Christopher Dodd

• Congressman Ron Paul (radio interview on March 6, 2009)

• Britian’s MI5 security agency

• Leading economic historian Niall Ferguson

• Leading economist Marc Faber and billionaire investor Jim Rogers

• Leading economist Nouriel Roubini

• Leading economist John Williams

• Top trend researcher Gerald Calente

• European think tank Leap2020

Source: Washington’s Blog

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Sign at homeless camp: ‘Welcome to Obamaville’

‘I’ve had 100 calls today and not a single 1 of them was negative’

Residents of Colorado Springs, Colo., have a mystery on their hands: Who came up with the idea to erect a sign reading “Welcome to Obamaville” on the site of a homeless tent camp in the city?

The sign, which was visible from the Cimarron Street ramp to Interstate 25, clearly conveyed a political jab at rising unemployment under President Barack Obama, for it read in full, “Welcome to Obamaville – Colorado’s fastest growing community.”

Colorado television station KRDO first reported on the sign earlier this week, but without any identifying logos or clues to the sign’s origin, the station launched a public appeal for information on the sign’s author.

KRDO got its first clue when Spencer Swann of Colorado Canyon Signs confessed to constructing the sign, though he denied it was his idea and still refuses to divulge for whom he built it. He did, however, explain that there was more to the sign’s intent than criticizing the sitting president:

“You mention his name, you get some attention – I think that was the whole idea behind it,” Swann told KRDO. “I didn’t dream it up, but I thought it was a good idea. I thought that it would help some of these guys down here.”

Public reaction on the KRDO website has been mixed over the sign’s message:

“Lay the blame where you will, I think it is a hoot and a great historical throwback to Hooverville,” wrote a reader named daman in an online comment. “These are the worst times I’ve seen in my 40-plus years, and I am glad my kids get to see it early. Maybe they’ll learn to grow and be compassionate, yet personally fiscal conservatives.”

A poster named Nick, however, was critical: “That is pretty low to use a right-wing political agenda and attack the homeless during the worst recession in a generation and especially during the holidays.”

Swann, however, says he’s received nothing but support:

“I’ve had 100 calls today,” Swann told the station, “and not a single one of them was negative.”

Nonetheless, Swann has since replaced the “Obamaville” sign with another, which reads, “Please help. We need firewood, propane and canned food.”

In response to some criticism that the money used to build the signs should have been used to help the homeless instead, Swann told KRDO that though the original “Obamaville” sign cost around $150, he didn’t charge the unknown creator for either sign. Furthermore, he said, the instigator of the “Obamaville” sign is already involved with helping the homeless:

“He gives them money, he gives them food, he gives them support,” said Swann.

As for his own motivations for building the sign, and doing so without charge, Swann told KRDO, “I thought it was just something to draw attention and help those folks.”

Source: WND

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